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Richard Adams

Richard Adams
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  • McDonald's: Business Model, Valuation And Minimum Wage Legislation [View article]
    The minimum wage was never meant to be a "living wage". It's a starting point or entry level. If the leftists (driven by the unions) get their way and make it a living wage and keep pushing it up the inflation will do great damage to the country.
    Feb 26, 2014. 07:25 PM | 11 Likes Like |Link to Comment
  • The CEO May Be McDonald's Secret Sauce [View article]
    "He plans to add employees to assist in achieving a lower wait time." The CEO does not dictate staffing levels. The franchisees do that and they will not add staff to make up for poor corporate decisions.
    Nov 15, 2014. 02:22 AM | 10 Likes Like |Link to Comment
  • Here Are 2 Things McDonald's Can Do To Increase Shareholder Value Right Now [View article]
    McDonald's didn't get to be the industry giant by copying weak competitors like Burger King.
    Oct 9, 2014. 04:42 PM | 8 Likes Like |Link to Comment
  • McDonald's Obsession With Starbucks [View article]
    McDonald's sells a lot of coffee, especially at the drive-thru during breakfast, but that's drip coffee. McCafe was originally about espresso and espresso drinks at McDonald's have been a massive failure. In fact, in terms of equipment costs, remodeling costs, and few billion $$$ in wasted advertising spending espresso drinks are the biggest new product introduction failure in the history of McDonald's.

    McDonald's franchisees tell me they don't sell enough espresso drinks to pay for the electricity to run the espresso machine.
    Nov 13, 2014. 05:05 PM | 5 Likes Like |Link to Comment
  • McDonald's: Recent Price Weakness May Present A Buying Opportunity [View article]
    Billyspeed is absolutely correct, the broadening of the menu and "innovation" are largely responsible for the sales problems at McDonald's. The kitchens are a disaster zone, the customers are confused, and the employees overwhelmed.
    Anyone calling for a broadening of the menu knows nothing about the restaurant business, unfortunately, that includes most of the top management people at McDonald's.

    As for technology solving the problem - it will only make a minor dent. The pre-pay and ordering option works like this. One can pay with their phone but since
    the credit card processing is so fast using your phone will only save nano -seconds. If you order remotely your food is not prepared until you show up at the restaurant. Why? People don't know when they are going to actually arrive. McDonald's, or any fast food, does not stand up well sitting around in a bag. After 10 or 15 minutes the quality is not acceptable and the food must be thrown away. You will order and pay remotely, arrive at the restaurant and give them your order number. Then they prepare your food.

    A little faster but not enough to make up for a bloated menu and a messed up operating system.
    Aug 28, 2014. 11:45 PM | 5 Likes Like |Link to Comment
  • McDonald's: An Undervalued Dividend Champion I Bought With A Margin Of Safety [View article]
    McDonald’s has always rejected the idea of doing anything with the real estate. They always say the “it’s not right for them”.

    The real estate situation is complicated by the franchise structure and I’ve never understood how they could pull equity out of their heritage real estate and not mess up the franchise relationships. If the REIT were to pay contemporary prices for McDonald’s owned real estate the REIT would then expect to charge contemporary rents when they lease back to McDonald’s. So McDonald’s gets some one-time cash but their revenue stream is reduced forever.

    The typical McDonald’s franchise agreement is for 20 years and the franchisee's rent terms are fixed in the contracts. McDonald's has no power to change the rent charged to the franchisee mid-term. Yes, they can adjust the rent when the franchise is renewed at 20 years but the rent still has to be reasonable or the franchisee will reject the new term.

    I agree with management, it’s not right for them.
    Aug 12, 2014. 04:27 PM | 4 Likes Like |Link to Comment
  • McDonald's Earnings Sneak Peak [View article]
    The problem at McDonald's is that analysts like Mr. Kelter have pushed for 'innovation" and new product news to the point the typical McDonald's restaurant can't handle the size and complexity of the expanded menu. If Wendy's and BK are doing better it's because they are getting the "spillover" of customers who won't get in the long lines at McDonald's. The answer is simplification, not innovation.
    Jan 20, 2014. 05:30 PM | 4 Likes Like |Link to Comment
  • Buffalo Wild Wings Soar As McDonald's Mighty Wings Flop [View article]
    It's difficult to have focus when you are trying to be all things to all people. It's hard to keep your eyes on your fries when there are so many products you can't find fries on the menu board. Remember, the McDonald brothers had a restaurant with a very broad, unworkable menu. They closed that restaurant to open the first real McDonald's, the simple, efficient McDonald's we all remember from our youth..
    Nov 5, 2013. 06:02 PM | 4 Likes Like |Link to Comment
  • Illustrating Why McDonald's Is Undervalued At Its Current Share Price [View article]
    You can't charge $8. / $9 / $10 for a meal at a restaurant that also offers a complete product line for $1 or $2. That's what killed the Angus line at McDonald's. One could buy a bag full of $1 sandwiches for the price of one Angus sandwich.
    Jan 22, 2015. 05:05 PM | 3 Likes Like |Link to Comment
  • Rebuttal: McDonald's Isn't Unhealthy For Your Portfolio If 5% Growth Actually Happens [View article]
    "management appears to be aware of the problems facing the company" - true enough, but there's no evidence they know what to do about the problems. So far they appear to be determined to "reinvent" McDonald's and are risking breaking the McDonald's business model to gain a few % in sales growth.
    Nov 15, 2014. 03:51 PM | 3 Likes Like |Link to Comment
  • McDonald's Obsession With Starbucks [View article]
    History has shown that once McDonald’s executives achieve a certain level (probably when they get a personal limo) they no longer want to be “hamburger guys”, they want to be “restaurateurs”. This mindset drove management to run around acquiring other, more upscale chains, in the 1990s and it’s why they became obsessed with Starbucks in this century. Everybody in Oak Brook wants to be Howard Schultz.
    Nov 13, 2014. 05:18 PM | 3 Likes Like |Link to Comment
  • McDonald's: An Undervalued Dividend Champion I Bought With A Margin Of Safety [View article]
    You are right but it's tough to take things off the menu when sales are soft because every customer, every sales dollar is precious. It's also hard because many of the poor selling menu items are on the menu for political reasons or to placate the food police.
    Aug 12, 2014. 04:57 PM | 3 Likes Like |Link to Comment
  • Buy McDonald's Before This Storm Subsides [View article]
    Liberals can only deal with the initial "feel good" idea of raising wages and cannot think through to the negative, inflationary impact on the economy.
    Jul 29, 2014. 02:42 PM | 3 Likes Like |Link to Comment
  • What To Make Of That 5% McDonald's Dividend Hike [View article]
    Counting on a 4-5% same store sales growth might be a stretch, at least in the USA. It appears that the average McDonald's in this country is going to have trouble increasing sales because of an overly complex menu resulting in slower service and longer lines. McDonald's USA will be lucky to squeeze out SSS increases in the low single digits in coming years unless they simplify their operations and increase the capacity of the restaurants.
    Jun 4, 2014. 04:43 PM | 3 Likes Like |Link to Comment
  • The debate on Chick-fil-A's unofficial stance on same-sex marriage keeps getting ratcheted up by politicians and activists from both sides pandering to crowds. While seemingly only a minor event a week ago, the large crowds gathering inside and outside of the chain's restaurants day after day has caught the eyes of at least a few restaurant analysts wondering if the flareup could affect U.S. sales at rivals MCD, WEN, and BKW[View news story]
    It's astounding that people who don't agree with everything concerning the gay lifestyle are called "bigots". A bigot is one who hates, not one who merely disagrees.
    Aug 3, 2012. 03:30 PM | 3 Likes Like |Link to Comment